Subsidiaries lift I&M Group profit 18pc in first quarter

I&M Group reported an 18.1 percent profit growth for the three-month period ended March, becoming the first tier one lender to record a double digit growth this year, buoyed by strong performances by its regional subsidiaries.

The group’s profit after tax rose to Sh3.9 billion in the quarter to March 2025 from Sh3.3 billion a year earlier with operations in Rwanda, Tanzania, Uganda and Mauritius contributing 26 percent of profits.

“We are seeing strong momentum across our subsidiary markets, with each business delivering improved performance and contributing more meaningfully to the Group’s Profit Before Tax, a clear indication that our regional diversification strategy is bearing fruit,” said Kihara Maina, the Group’s Regional CEO.

The group disclosed Uganda was the fastest growing unit with its profits jumping 138 percent, while Tanzania grew 128 percent, Rwanda recorded 14 percent increase and Mauritius 13 percent.

The profit growth set it apart from its peers who have been weighed down by decline in interest income and forex earnings resulting in slow or stunted net earnings .A stable shilling since the turn of the year has denied forex traders margins to exploit unlike last year when the shilling was volatile.

“Commendable is that I&M managed to keep foreign exchange income steady in quarter one 2025 while some peers recorded losses,” said Sterling Capital in a note to investors.

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The group's loan book grew marginally, 0.7 percent, to Sh293 billion but its interest income from loans declined 8.4 percent capturing decline in interest rates across the region. A 36 percent jump in interest from government securities, following a Sh40 billion increase in investment in Treasury bills and bonds, helped cover the decline in earnings from advances to customers.

The group stock of government securities rose to Sh143 billion in March 2025 from Sh103 billion in the same month last year.

“We however noticed that I&M increased holdings of Government securities by 40.3 percent which partly supported margin expansion, a strategy that might be eminent full year 2025 across some of the banks,” said Sterling Capital.

Customer deposits rose 6 percent to Sh407 billion but interest paid to customers dropped 9.8 percent in tandem with declining market rates. I&M Group reduced its borrowed funds by Sh4.2 billion further reducing its interest expenses by 39 percent to Sh632 million.

The group raised Sh4.1 billion in new capital early this month after issuing 86.5 million new shares to a consortium of institutional investors led by private equity firm AfricInvest.

The group has earmarked the cash for regional expansion and growth of digital expansion as the lender pushes to grow its customer base especially in the retail market.

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